Tuesday, February 15, 2011

Tyler Cowen's Explanation for Rising Income Inequality

http://www.nytimes.com/2007/05/17/business/17scene.html?ex=1337054400&en=3f3a61a977278b6e&ei=5124&partner=permalink&exprod=permalink

Tyler Cowen is an economist at George Mason University. George Mason has been the recipient of grants from leading arch conservatives such as the Koch family. It's faculty has, not surprisingly, produced lots of material on political economy that gets published in the Wall Street Journal and cited by other conservative opinion makers. Rising income inequality has become a problem in the US and in many other countries. It clearly, was a major cause of the revolt in Egypt and one of my recent posts called it the next wild card in the economy. Consequently, conservatives feel compelled to explain away the problem in socially accepted terms. Tyler Cowen makes his attempt at an acceptable explanation. In this article he tells us that we should ignore the problems of rising inequality within the top income bracket, we should focus on the inequality between the lower income brackets and that problem has nothing to do with the nature of our economic system. High returns on education account for the rising inequality and our education system has been unable to keep up with advances in technology that produce the high paying jobs.
In short, according to Cowen, the problem is access to education. Since it is common knowledge that a college education provides access to higher paying jobs, his explanation will ring true to many Americans. It also locates the blame for inequality on those who have not invested in education. It has little to do with our economy or with political changes that have contributed to rising inequality. You will notice that Tyler Cowen is also the subject of a post on David Brooks that I made today.

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